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sales Sales are activities related to selling or the number of goods sold in a given targeted time period. The delivery of a service for a cost is also considered a sale. The seller, or the provider of the goods or services, completes a sale in ...
,
commerce Commerce is the large-scale organized system of activities, functions, procedures and institutions directly and indirectly related to the exchange (buying and selling) of goods and services among two or more parties within local, regional, nation ...
, and
economics Economics () is the social science that studies the Production (economics), production, distribution (economics), distribution, and Consumption (economics), consumption of goods and services. Economics focuses on the behaviour and intera ...
, a customer (sometimes known as a
client Client(s) or The Client may refer to: * Client (business) * Client (computing), hardware or software that accesses a remote service on another computer * Customer or client, a recipient of goods or services in return for monetary or other valuabl ...
,
buyer Procurement is the method of discovering and agreeing to terms and purchasing goods, services, or other works from an external source, often with the use of a tendering or competitive bidding process. When a government agency buys goods or serv ...
, or purchaser) is the recipient of a
good In most contexts, the concept of good denotes the conduct that should be preferred when posed with a choice between possible actions. Good is generally considered to be the opposite of evil and is of interest in the study of ethics, morality, ph ...
, service,
product Product may refer to: Business * Product (business), an item that serves as a solution to a specific consumer problem. * Product (project management), a deliverable or set of deliverables that contribute to a business solution Mathematics * Produ ...
or an
idea In common usage and in philosophy, ideas are the results of thought. Also in philosophy, ideas can also be mental representational images of some object. Many philosophers have considered ideas to be a fundamental ontological category of being ...
- obtained from a
seller Sales are activities related to selling or the number of goods sold in a given targeted time period. The delivery of a service for a cost is also considered a sale. The seller, or the provider of the goods or services, completes a sale in r ...
,
vendor In a supply chain, a vendor, supplier, provider or a seller, is an enterprise that contributes goods or services. Generally, a supply chain vendor manufactures inventory/stock items and sells them to the next link in the chain. Today, these terms ...
, or supplier via a financial transaction or
exchange Exchange may refer to: Physics *Gas exchange is the movement of oxygen and carbon dioxide molecules from a region of higher concentration to a region of lower concentration. Places United States * Exchange, Indiana, an unincorporated community * ...
for
money Money is any item or verifiable record that is generally accepted as payment for goods and services and repayment of debts, such as taxes, in a particular country or socio-economic context. The primary functions which distinguish money are as ...
or some other valuable consideration.


Etymology and terminology

Early societies relied on a gift economy based on favours. Later, as
commerce Commerce is the large-scale organized system of activities, functions, procedures and institutions directly and indirectly related to the exchange (buying and selling) of goods and services among two or more parties within local, regional, nation ...
developed, less permanent human relations were formed, depending more on transitory
need A need is dissatisfaction at a point of time and in a given context. Needs are distinguished from wants. In the case of a need, a deficiency causes a clear adverse outcome: a dysfunction or death. In other words, a need is something required for a ...
s rather than enduring social
desire Desires are states of mind that are expressed by terms like "wanting", "wishing", "longing" or "craving". A great variety of features is commonly associated with desires. They are seen as propositional attitudes towards conceivable states of aff ...
s. Customers are generally said to be the purchasers of goods and services, while clients are those who receive personalized advice and solutions. Although such distinctions have no contemporary semantic weight, agencies such as law firms, film studios, and
health care provider A health care provider is an individual health professional or a health facility organization licensed to provide health care diagnosis and treatment services including medication, surgery and medical devices. Health care providers often receive ...
s tend to prefer ''
client Client(s) or The Client may refer to: * Client (business) * Client (computing), hardware or software that accesses a remote service on another computer * Customer or client, a recipient of goods or services in return for monetary or other valuabl ...
'', while
grocery store A grocery store ( AE), grocery shop ( BE) or simply grocery is a store that primarily retails a general range of food products, which may be fresh or packaged. In everyday U.S. usage, however, "grocery store" is a synonym for supermarket, a ...
s,
bank A bank is a financial institution that accepts deposits from the public and creates a demand deposit while simultaneously making loans. Lending activities can be directly performed by the bank or indirectly through capital markets. Because ...
s, and
restaurant A restaurant is a business that prepares and serves food and drinks to customers. Meals are generally served and eaten on the premises, but many restaurants also offer take-out and food delivery services. Restaurants vary greatly in appearan ...
s tend to prefer '' customer'' instead.


Clients

The term client is derived from Latin ''clients'' or ''care'' meaning "to incline" or "to bend", and is related to the emotive idea of closure. It is widely believed that people only change their habits when motivated by
greed and fear Greed and fear refer to two opposing emotional states theorized as factors causing the unpredictability and volatility of the stock market, and irrational market behavior inconsistent with the efficient-market hypothesis. Greed and fear relate ...
. Winning a client is, therefore, a singular event, which is why professional specialists who deal with particular problems tend to attract long-term clients rather than regular customers. Unlike regular customers, who buy merely on price and value, long-term clients buy on experience and trust.


Customers

Clients who habitually return to a seller develop
custom Custom, customary, or consuetudinary may refer to: Traditions, laws, and religion * Convention (norm), a set of agreed, stipulated or generally accepted rules, norms, standards or criteria, often taking the form of a custom * Norm (social), a r ...
s that allow for regular, sustained commerce that allows the seller to develop statistical models to optimize
production Production may refer to: Economics and business * Production (economics) * Production, the act of manufacturing goods * Production, in the outline of industrial organization, the act of making products (goods and services) * Production as a stati ...
processes (which change the nature or form of goods or services) and supply chains (which changes the location or formalizes the changes of ownership or entitlement transactions).


Customer segmentation

In the 21st century customers are generally categorized into two types: * an
entrepreneur Entrepreneurship is the creation or extraction of economic value. With this definition, entrepreneurship is viewed as change, generally entailing risk beyond what is normally encountered in starting a business, which may include other values th ...
or
trade Trade involves the transfer of goods and services from one person or entity to another, often in exchange for money. Economists refer to a system or network that allows trade as a market. An early form of trade, barter, saw the direct excha ...
r (sometimes a commercial Intermediary) - a dealer who purchases goods for re-sale. * an end user or ultimate customer who does not re-sell the things bought but is the actual
consumer A consumer is a person or a group who intends to order, or uses purchased goods, products, or services primarily for personal, social, family, household and similar needs, who is not directly related to entrepreneurial or business activities. ...
or an agent such as a Purchasing officer for the consumer. A customer may or may not also be a
consumer A consumer is a person or a group who intends to order, or uses purchased goods, products, or services primarily for personal, social, family, household and similar needs, who is not directly related to entrepreneurial or business activities. ...
, but the two notions are distinct. A customer ''purchases'' goods; a consumer ''uses'' them. An ultimate customer ''may'' be a consumer as well, but just as equally may have purchased items for someone else to consume. An intermediate customer is not a consumer at all. The situation is somewhat complicated in that ultimate customers of so-called ''industrial'' goods and services (who are entities such as government bodies, manufacturers, and educational and medical institutions) either themselves use up the goods and services that they buy, or incorporate them into other finished products, and so are technically consumers, too. However, they are rarely called that, but are rather called industrial customers or business-to-business customers. Similarly, customers who buy services rather than goods are rarely called consumers. Six Sigma doctrine places (active) customers in opposition to two other classes of people: ''not-''customers and ''non-''customers: * Customers of a given
business Business is the practice of making one's living or making money by producing or Trade, buying and selling Product (business), products (such as goods and Service (economics), services). It is also "any activity or enterprise entered into for pr ...
have actively dealt with that business within a particular recent period that depends on the product sold. * Not-customers are either past customers who are no longer customers or potential customers who choose to interact with the competition. * Non-customers are people who are active in a different
market segment In marketing, market segmentation is the process of dividing a broad consumer or business market, normally consisting of existing and potential customers, into sub-groups of consumers (known as ''segments'') based on some type of shared charact ...
entirely. Geoff Tennant, a Six Sigma consultant from the United Kingdom, uses the following
analogy Analogy (from Greek ''analogia'', "proportion", from ''ana-'' "upon, according to" lso "against", "anew"+ ''logos'' "ratio" lso "word, speech, reckoning" is a cognitive process of transferring information or meaning from a particular subject ( ...
to explain the difference: A supermarket's customer is the person buying milk at that supermarket; a not-customer buys milk from a competing supermarket, whereas a non-customer doesn't buy milk from supermarkets at all but rather "has milk delivered to the door in the traditional British way". Tennant also categorizes customers in another way that is employed outwith the fields of
marketing Marketing is the process of exploring, creating, and delivering value to meet the needs of a target market in terms of goods and services; potentially including selection of a target audience; selection of certain attributes or themes to emph ...
. While marketers, market regulation, and economists use the intermediate/ultimate categorization, the field of
customer service Customer service is the assistance and advice provided by a company to those people who buy or use its products or services. Each industry requires different levels of customer service, but in the end, the idea of a well-performed service is that ...
more often categorizes customers into two classes: # An external customer of an organization is a customer who is not directly connected to that organization. # An internal customer is a customer who is directly connected to an organization, and is usually (but not necessarily) internal to the organization. Internal customers are usually stakeholders, employees, or
shareholder A shareholder (in the United States often referred to as stockholder) of a corporation is an individual or legal entity (such as another corporation, a body politic, a trust or partnership) that is registered by the corporation as the legal own ...
s, but the definition also encompasses creditors and external regulators. Before the introduction of the notion of an internal customer, external customers were, simply, customers. Quality-management writer
Joseph M. Juran Joseph Moses Juran (December 24, 1904 – February 28, 2008) was a Romanian-born American engineer and management consultant. He was an evangelist for quality and quality management, having written several books on those subjects. He was the brot ...
popularized the concept, introducing it in 1988 in the fourth edition of his ''Quality Control Handbook'' . The idea has since gained wide acceptance in the literature on total quality management and service marketing; and many organizations recognize the
customer satisfaction Customer satisfaction (often abbreviated as CSAT) is a term frequently used in marketing. It is a measure of how products and services supplied by a company meet or surpass customer expectation. Customer satisfaction is defined as "the number of ...
of internal customers as a precursor to, and a prerequisite for, external customer satisfaction, with authors such as regarding service organizations which design products for internal customer satisfaction as better able to satisfy the needs of external customers. Research on the theory and practice of managing the internal customer continues in a variety of service-sector industries.


Arguments against use of the term "internal customers"

Leading authors in management and marketing, like
Peter Drucker Peter Ferdinand Drucker (; ; November 19, 1909 – November 11, 2005) was an Austrian-American management consultant, educator, and author, whose writings contributed to the philosophical and practical foundations of the modern business co ...
,
Philip Kotler Philip Kotler (born May 27, 1931) is an American marketing author, consultant, and professor emeritus; the S. C. Johnson & Son Distinguished Professor of International Marketing at the Kellogg School of Management at Northwestern University ...
,
W. Edwards Deming William Edwards Deming (October 14, 1900 – December 20, 1993) was an American engineer, statistician, professor, author, lecturer, and management consultant. Educated initially as an electrical engineer and later specializing in mathematical ...
, etc., have not used the term "internal customer" in their works. They consider the "customer" as a very specific role in society which represents a crucial part in the relationship between the demand and the supply. Some of the most important characteristics of any customer are that: any customer is never in a subordination line with any supplier; any customer has equal positions with the supplier within negotiations, and any customer can accept or reject any offer for a service or a product. Peter Drucker wrote, "They are all people who can say no, people who have the choice to accept or reject what you offer." In opposition to the stated customer's characteristics, relationships between colleagues in a company are always based on subordination – direct or indirect. Company employees are obliged to follow the processes of their companies. Company employees do not have the authority to choose a unit/colleague to fulfill any task. Company employees are obliged to use an existing unit/colleague by using the company's structure and approved processes, therefore these internal relationships are not considered as an option. Many authors in
ITIL The Information Technology Infrastructure Library (ITIL) is a set of detailed practices for IT activities such as IT service management (ITSM) and IT asset management (ITAM) that focus on aligning IT services with the needs of business. ITIL de ...
and Six Sigma methodologies define "internal customer" as an internal part of a company that uses the output of another part of a company as its input. But actually, this definition describes better a classical internal process rather than a relationship between a customer and a supplier. Peter Drucker considers that there are no customers inside organizations. He wrote "Inside an organization, there are only cost centers. The only profit center is a customer whose check has not bounced." In addition, William Deming advises managers, in his 9th point, to "Break down barriers between departments. They must work as a team", which means that there have to be teamwork in a company rather than a supplier/customer relationship. One more argument, even the ITIL methodology admits that "the term 'colleague' may be more accurate in describing how two internal groups are related to one another.".


See also

*
Client (business) In business, commerce, and economics, a client is a person who receives advice or services from a professional, such as a lawyer or a health care provider. Clients differ from customers in that customers are thought of as "one-time buyers" while cl ...
*
Customer centricity Customer satisfaction (often abbreviated as CSAT) is a term frequently used in marketing. It is a measure of how products and services supplied by a company meet or surpass customer expectation. Customer satisfaction is defined as "the number of c ...
*
Customer data integration Data integration involves combining data residing in different sources and providing users with a unified view of them. This process becomes significant in a variety of situations, which include both commercial (such as when two similar companies ...
* Customer delight *
Customer relationship management Customer relationship management (CRM) is a process in which a business or other organization administers its interactions with customers, typically using data analysis to study large amounts of information. CRM systems compile data from a ra ...
*
Early adopter An early adopter or lighthouse customer is an early customer of a given company, product, or technology. The term originates from Everett M. Rogers' ''Diffusion of Innovations'' (1962). History Typically, early adopters are customers who, in addit ...
*
Guided selling Guided selling is a process that helps potential buyers of products or services to choose the product best fulfilling their needs and hopefully guides the buyer to buy. It also helps vendors of products (e.g. brands, retailer) to actively guide the ...
*
Procurement Procurement is the method of discovering and agreeing to terms and purchasing goods, services, or other works from an external source, often with the use of a tendering or competitive bidding process. When a government agency buys goods or serv ...
*
Service level agreement A service-level agreement (SLA) is a commitment between a service provider and a customer. Particular aspects of the service – quality, availability, responsibilities – are agreed between the service provider and the service user. ...
*
The customer is always right __NOTOC__ "The customer is always right" is a motto or slogan which exhorts service staff to give a high priority to customer satisfaction. It was popularised by pioneering and successful retailers such as Harry Gordon Selfridge, John Wanamake ...


Notes


References

* * * * * * * * * *


Further reading

* *
Forget Demographics. Target Communities Instead (Marketing)
{{Authority control Sales Supply chain management